{
  "title": "Public Information Notice: IMF Executive Board Concludes 2012 Article IV Consultation with the Slovak Republic",
  "publication": "IMF News, July 17, 2012",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/pn1278",
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  "summary": "Each Public Information Notice contains a background section, a table of selected economic indicators, and an Executive Board assessment.",
  "publishDate": "2012-07-17",
  "sections": [
    {
      "heading": "Background and recent economic performance",
      "content": "- Real GDP grew 3.3 percent in 2011; post-crisis performance among the strongest in the euro area, with real GDP surpassing its pre-crisis peak in the last quarter of 2011.\n- Growth drivers:\n  - Strong exports and expanding auto production supported growth into Q1 2012.\n  - Robust performance of net exports offset contraction in domestic demand amid fiscal consolidation and volatile consumer confidence.\n- Labor market:\n  - Unemployment surged during the crisis by 5 percentage points to over 14 percent, declining only slightly to 13¾ percent in April 2012.\n  - Unemployment particularly high in less developed regions, contributing to large regional income disparity.\n- Inflation:\n  - Inflation surged to 4.7 percent in 2011 due to increases in tax and administered prices and global energy prices.\n  - Inflation eased to 3.4 percent in May 2012 but remains among the highest in the EU.\n- Financial sector:\n  - Banks’ profitability increased; capital adequacy ratios rose to 15 percent of risk-weighted assets throughout 2011.\n  - Reliance on domestic deposits shielded banks from euro area developments and supported a modest credit expansion.\n- Fiscal developments:\n  - Frontloaded fiscal consolidation reduced the 2011 headline deficit by 3 percentage points to 4¾ percent of GDP.\n  - Underlying fiscal deficit, excluding one-off payments, declined to 4.4 percent of GDP.\n  - Public sector debt rose by 3 percentage points to 44 percent of GDP at end-2011.\n  - Fiscal Responsibility Law adopted December 2011: sets limits on public debt—60 percent of GDP until 2017 and gradually declining to 50 percent of GDP by 2027."
    },
    {
      "heading": "Outlook and risks",
      "content": "- Growth projections and inflation:\n  - Real GDP expected to slow to 2.6 percent in 2012, before picking up to 3¼ percent in 2013 as external environment strengthens.\n  - Inflation expected to ease to below 3 percent by end-2012 as one-off factors fade and absent further supply shocks.\n- Key external risk:\n  - Continued euro zone stress; renewed severe strains in Europe could precipitate a global downturn and reduce demand for Slovak exports with significant adverse implications for growth."
    },
    {
      "heading": "Executive Board assessment — findings and policy recommendations",
      "content": "- Commendations and concerns:\n  - Directors commended prudent macroeconomic policies and sound fundamentals underpinning the strong recovery.\n  - Directors considered external risks, high fiscal deficits, and the double-digit unemployment rate as significant policy challenges.\n- Fiscal policy:\n  - Supported authorities’ consolidation strategy to achieve fiscal sustainability; planned measures appear to balance fiscal solvency and support for economic activity.\n  - Encouraged development of a robust medium-term fiscal framework, building on the Fiscal Responsibility Law.\n  - Welcomed government plans to reform public administration, strengthen tax administration, and increase efficiency of public spending, including on healthcare.\n  - Stressed importance of safeguarding pension system solvency by grounding prospective changes on actuarial analysis.\n- Financial sector supervision:\n  - Noted banking system appears sound but emphasized need for continued supervisory vigilance.\n  - Welcomed steps to strengthen banks’ capital and liquidity buffers; stressed enhanced cooperation with home supervisors to curb cross-border risks.\n  - Recommended subjecting all types of housing loans to the same prudential norms to help prevent excessive risk-taking.\n  - Recommended removing tax obstacles that could delay resolution of non-performing loans.\n- Structural reforms and labor market:\n  - Underscored importance of deeper structural reforms to boost employment and address regional disparities.\n  - Noted effective implementation of the reformed labor code could help reduce unemployment.\n  - Welcomed plans to foster development of disadvantaged regions.\n  - Recommended improving vocational education and incentives to work to address labor market rigidities.\n  - Welcomed authorities’ intention to further strengthen the business climate to attract investment."
    },
    {
      "heading": "Slovak Republic — Selected economic indicators and projections (2008–13)",
      "content": "- Population (in millions): 5.4\n- Per capita income ($): 16,830\n- Quota (current; millions SDR/% of total): 427.5 / 0.18\n- Literacy / poverty rate 1/: 99 / 20.6\n- Main products and exports: Transport equipment, machinery and electric equipment\n- Key export markets: Germany, Czech Republic\n\nProjections (Annual percentage change, constant prices, unless noted otherwise)\n- Real GDP: 2008: 5.8; 2009: -4.9; 2010: 4.2; 2011: 3.3; 2012: 2.6; 2013: 3¼\n- Domestic demand: 2008: 5.7; 2009: -7.4; 2010: 4.5; 2011: -1.5; 2012: 0.7; 2013: 2.0\n- Public consumption: 2008: 6.1; 2009: 1.1; 2010: -3.5; 2011: 1.3; 2012: 1.4\n- Private consumption: 2008: 0.2; 2009: -0.7; 2010: -0.4; 2011: 1.2\n- Gross capital formation: 2008: 4.7; 2009: -30.2; 2010: 22.1; 2011: -2.7; 2012: (not listed)\n- Exports of goods and services: 2008: 3.1; 2009: -15.9; 2010: 16.5; 2011: 10.8; 2012: 4.4; 2013: 7.0\n- Imports of goods and services: 2008: -18.1; 2009: 16.3; 2010: 6.0; 2011: (not listed)\n- Output Gap: 2008: 2.8; 2009: -3.4; 2010: -1.0; 2011: -0.6; 2012: -1.2; 2013: -1.1\n- Potential Growth: 2008: 6.2; 2009: 1.6; 2010: 2.9; 2011: 3.2\n\nPrices\n- Inflation (HICP): 2008: 3.9; 2009: 0.9; 2010: 4.1; 2011: 4.0; 2012: 2.3\n- Inflation (HICP, end of period): 2008: 3.5; 2009: 0.1; 2010: 2.1; 2011: (not listed)\n\nEmployment and wages\n- Employment: 2008: -2.8; 2009: -2.0; 2010: 1.5; 2011: -0.2; 2012: 0.8\n- Nominal wages: 2008: 7.6; 2009: 5.1; 2010: 3.7; 2011: (not listed)\n- Unemployment rate (percent): 2008: 9.6; 2009: 12.1; 2010: 14.4; 2011: 13.5; 2012: 13.8; 2013: 13.6\n\nPublic finance, general government (Percent of GDP)\n- Revenue: 2008: 33.0; 2009: 33.7; 2010: 32.4; 2011: 32.6; 2012: 34.1\n- Expenditure: 2008: 35.0; 2009: 41.7; 2010: 40.0; 2011: 37.4; 2012: 37.0; 2013: 36.9\n- Overall balance: 2008: -2.1; 2009: -8.0; 2010: -7.7; 2011: -4.8; 2012: -4.4; 2013: -2.9\n- Primary balance: 2008: -0.8; 2009: -6.6; 2010: -6.3; 2011: -3.2\n- Structural balance (percent of potential GDP): 2008: -3.1; 2009: -7.1; 2010: -4.2; 2011: -4.1; 2012: -2.5\n- General government debt: 2008: 27.9; 2009: 35.6; 2010: 41.1; 2011: 43.9; 2012: 46.5; 2013: 47.2\n\nMonetary and financial indicators\n- Bank credit to private sector (growth rate): 2008: 15.6; 2009: 1.0; 2010: 4.3; 2011: 8.6\n- Lending rates 2/: 2008: 6.8; 2009: 5.9\n- Deposit rates 3/: 2008: 0.3\n- Government 10-year bond yield: (not listed)\n\nBalance of payments\n- Trade balance (goods): 2008: 3.8\n- Current account balance: 2008: -2.6; 2009: -0.3\n- Gross external debt: 2008: 56.5; 2009: 72.2; 2010: 74.9; 2011: 75.4; 2012: 70.5; 2013: 65.5\n\nNotes:\n- 1/ Percent of population aged 15 and over who can read and write. At-risk-of-poverty rate in percent of total population, 2010. At risk-of-poverty are persons with an equivalised disposable income below the risk-of-poverty threshold, which is set at 60 % of the national median equivalised disposable income (after social transfers).\n- 2/ Loans of up to one year, non-housing new loans to households.\n- 3/ Average of interest rates on new overnight deposits from households and nonfinancial corporations.\n\nPublic Information Notice (PIN) No. 12/78 — Executive Board concluded the Article IV consultation with the Slovak Republic on July 11, 2012 and endorsed the staff appraisal.\n\n---\n\n Content in this bundle\n\n- Country Report (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Slovak Republic and the IMF\n- Public Information Notices\n- Adobe Acrobat Reader\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/pn1278"
    }
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    "Published: July 17, 2012",
    "Real GDP grew 3.3 percent in 2011; post-crisis performance among the strongest in the euro area, with real GDP surpassing its pre-crisis peak in the last quarter of 2011.",
    "Growth drivers:",
    "Labor market:",
    "Inflation:",
    "Financial sector:",
    "Fiscal developments:",
    "Growth projections and inflation:",
    "Key external risk:",
    "Commendations and concerns:",
    "Fiscal policy:",
    "Financial sector supervision:",
    "Structural reforms and labor market:",
    "Population (in millions): 5.4",
    "Per capita income ($): 16,830",
    "Quota (current; millions SDR/% of total): 427.5 / 0.18",
    "Literacy / poverty rate 1/: 99 / 20.6",
    "Main products and exports: Transport equipment, machinery and electric equipment",
    "Key export markets: Germany, Czech Republic",
    "Real GDP: 2008: 5.8; 2009: -4.9; 2010: 4.2; 2011: 3.3; 2012: 2.6; 2013: 3¼",
    "Domestic demand: 2008: 5.7; 2009: -7.4; 2010: 4.5; 2011: -1.5; 2012: 0.7; 2013: 2.0",
    "Public consumption: 2008: 6.1; 2009: 1.1; 2010: -3.5; 2011: 1.3; 2012: 1.4",
    "Private consumption: 2008: 0.2; 2009: -0.7; 2010: -0.4; 2011: 1.2",
    "Gross capital formation: 2008: 4.7; 2009: -30.2; 2010: 22.1; 2011: -2.7; 2012: (not listed)",
    "Exports of goods and services: 2008: 3.1; 2009: -15.9; 2010: 16.5; 2011: 10.8; 2012: 4.4; 2013: 7.0",
    "Imports of goods and services: 2008: -18.1; 2009: 16.3; 2010: 6.0; 2011: (not listed)",
    "Output Gap: 2008: 2.8; 2009: -3.4; 2010: -1.0; 2011: -0.6; 2012: -1.2; 2013: -1.1",
    "Potential Growth: 2008: 6.2; 2009: 1.6; 2010: 2.9; 2011: 3.2",
    "Inflation (HICP): 2008: 3.9; 2009: 0.9; 2010: 4.1; 2011: 4.0; 2012: 2.3",
    "Inflation (HICP, end of period): 2008: 3.5; 2009: 0.1; 2010: 2.1; 2011: (not listed)",
    "Employment: 2008: -2.8; 2009: -2.0; 2010: 1.5; 2011: -0.2; 2012: 0.8",
    "Nominal wages: 2008: 7.6; 2009: 5.1; 2010: 3.7; 2011: (not listed)",
    "Unemployment rate (percent): 2008: 9.6; 2009: 12.1; 2010: 14.4; 2011: 13.5; 2012: 13.8; 2013: 13.6",
    "Revenue: 2008: 33.0; 2009: 33.7; 2010: 32.4; 2011: 32.6; 2012: 34.1",
    "Expenditure: 2008: 35.0; 2009: 41.7; 2010: 40.0; 2011: 37.4; 2012: 37.0; 2013: 36.9",
    "Overall balance: 2008: -2.1; 2009: -8.0; 2010: -7.7; 2011: -4.8; 2012: -4.4; 2013: -2.9",
    "Primary balance: 2008: -0.8; 2009: -6.6; 2010: -6.3; 2011: -3.2",
    "Structural balance (percent of potential GDP): 2008: -3.1; 2009: -7.1; 2010: -4.2; 2011: -4.1; 2012: -2.5",
    "General government debt: 2008: 27.9; 2009: 35.6; 2010: 41.1; 2011: 43.9; 2012: 46.5; 2013: 47.2",
    "Bank credit to private sector (growth rate): 2008: 15.6; 2009: 1.0; 2010: 4.3; 2011: 8.6",
    "Lending rates 2/: 2008: 6.8; 2009: 5.9",
    "Deposit rates 3/: 2008: 0.3",
    "Government 10-year bond yield: (not listed)",
    "Trade balance (goods): 2008: 3.8",
    "Current account balance: 2008: -2.6; 2009: -0.3",
    "Gross external debt: 2008: 56.5; 2009: 72.2; 2010: 74.9; 2011: 75.4; 2012: 70.5; 2013: 65.5",
    "1/ Percent of population aged 15 and over who can read and write. At-risk-of-poverty rate in percent of total population, 2010. At risk-of-poverty are persons with an equivalised disposable income below the risk-of-poverty threshold, which is set at 60 % of the national median equivalised disposable income (after social transfers).",
    "2/ Loans of up to one year, non-housing new loans to households.",
    "3/ Average of interest rates on new overnight deposits from households and nonfinancial corporations.",
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    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](https://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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